How to optimize an Affiliate Marketing Program for Profitability

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Pat Flynn’s Smart Passive income defines Affiliate Marketing in simple a term which says, “Affiliate Marketing is the process of earning a commission by promoting other people’s [or company’s] products. You find a product you like, promote it to others and earn a piece of the profit for each sale that you make.

Affiliate Marketing involves 3 main parties-

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1. The Merchant

This is the party that creates the product. Also known as the seller, the brand or the vendor. This party can be anybody with a product to sell no matter how big or small the product or the Organisation is.

2. The Affiliate

The affiliates are also known as Publisher known. This is where the marketing happens. An affiliate promotes one or more products and tries to convince the potential customer to buy merchant’s products.

This is the main party without which the other two don’t hold a chance. Only if the consumer buys the product, will the affiliate and the merchant gain revenue.

The Affiliate Marketing Network:

This acts as an intermediate between the affiliate and the merchant where the affiliates go to find valuable products to promote and similarly merchants can find a lot of affiliates according to their requirement.

Apart from being a matchmaking service, affiliate network takes away a lot of administrative and logistic workload in managing an affiliate marketing program by handling all the tracking, reporting and payment processing.

How does affiliate marketing work?

Here’s how you optimize your affiliate marketing program

Affiliate marketing is all about getting the right traffic to the merchant’s site and converting them to customers.

In order to optimize and get the best out affiliate marketing, you need to consider the following guidelines-

1. Perform customer analysis and estimate the revenue data

Here are some questions to ask yourself

. Do you know the value of a new customer?

. Do you know the value of a repeat customer?

. Are you aware of lifetime value?

. Are you aware of profit margin on every type of sale?

. Are you aware of cost per acquisition on other channels?

You need to have a clear understanding of the above questions in order to frame your affiliate payouts, set guidelines and measure the success of your optimization efforts.

a. Choose the right affiliate for your company

A program cannot grow without reaching out to new and potential customers. Thereby, choosing affiliates who can do it right is very crucial. Good affiliates are always on demand so you need to take your time and effort in recruiting one.

An agency can be a good option with well-defined payouts (for cost per acquisition) and KPIs(Key performance Indexes).

Some of the factors to be considered are:

. What Industry verticals and GEOs the affiliate specializes into and are they aligned with your target audience?

. History of running affiliate campaigns for similar and other products

. What other promotions are they involved in?

. Do they have any past experience with this demography?

. What type of sites do they run?

. What methods or practices do they follow?

Once affiliates are recruited, it is highly important for them to have a deep understanding of the products and services you offer in order to achieve the expected results.

You could bridge this gap by,

. Assigning an affiliate manager for every affiliate right away so that they have a dedicated contact.

. Ensuring that all affiliates understand your value proposition.

. Ensuring that they understand your brand and brand’s voice.

. Share user demographics and customer research.

. Let them know your top performing channels and traffic sources.

The more information you provide, the better understanding they will have for them to come up with stronger marketing strategies instead of wasting their efforts in the wrong places.

b. Reach out to your affiliates often

Communication” is the key for a successful affiliate marketing program. You need to ensure that you and your affiliates are on the same page regarding the strategies involved.

This would help your affiliates –

. To be better equipped to promote your products or services to the right audience.

. To be more proactive in getting the work done

. To share their leanings with you which could help you guide other affiliates or in-house operations.

You could discuss about how well the campaign is performing, its volume potential, the pain points faced and how to overcome them.

c. Inspect the affiliate marketing methods used and restrict them if necessary.

Affiliates use several methods to drive traffic. Some of the popular methods are Media buying, Email marketing, Display advertisement, PPC etc

Affiliate programs can also have method restrictions. Overlapping of PPC campaigns can turn into a blunder.

For example, if your existing efforts are in running PPC campaigns, it would be inefficient for your affiliates to run them as well because you will have them compete with you for rank.

You can avoid this by telling affiliates about the channels that work for you and the ones that don’t.

Most affiliate networks allow you to search for affiliates by their primary promotion method which may include-

Coupon/Deal Email marketing Loyalty/Rewards Mobile App CPA/Sub-Affiliate Search

Price comparison Social shopping Software/Tech Content/Niche Service/Tools

d. Run tests on your offers and landing pages frequently

If you run your own landing pages and have affiliates simply drive traffic to it, then it is very easy to A/B test elements of the page including the offer.

But if you have affiliates run their own landing pages, then share your testing insights because end of the day everyone is working to achieve the same goal.

For maximum results, you need to calculate conversion rates of every affiliate to determine the quality of traffic each affiliate brings in.

For example, One of the affiliates might tell you that he has less than 1% conversion rate. You tend to believe that, as your overall conversion rate is just 5%. But when you calculate the individual conversion rates, you notice that the second affiliate is getting 5% conversion rate and the first affiliate is bringing the overall number down. Therefore, in order to obtain maximum results, you have to drill down individual conversion rates.

To achieve optimized affiliate marketing results for your product, usage of the strategies such as Media buying, Email marketing, Display advertisement and PPC can be a great asset.



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